Friday, February 22, 2008

2008 BC Budget

The Climate Change Budget. It is nice to see the government beginning to understand that one of the strongest public policy tools that is has is taxation. Tax shifting has been around as an idea for years now, but very few governments are willing to move forward with it. BC is starting to break this mold.

The budget has introduced a modest carbon tax and balanced it with tax cuts in other areas. The goal is no change in net revenues.

The amount the price so fuel is going to rise is still not enough that it is going to make a dramatic difference, but another few cents a litre is going to make people think and will make people move forward with different choices.

Not very long ago a litre of gasoline was in the 50 cent range. Now it is around $1.10 a litre. at 25 000 km per year and 15 l/100 km, this means fuel has gone from $1875 per year to $4125 - that is an extra $2250 a year. Trading in this heavy gas user for one that comes in at 7.5l/100 km - quite reasonable for a lot of sedans now - your current gas bill will come in at about $2065 a year, not much more than what was spent a few years earlier.

Moving from an Xtera to an Optra would achieve this savings. $2000 a year is nothing to sneeze at- this is $40 a week.

It also makes sense to try and improve your gas mileage - saving 10% in fuel a year is now worth hundreds of dollars. It also becomes worthwhile to look at reducing the amount of travelling - say you drop that by 10% as well. You could go from $4125 the Xtera would cost you with current driving numbers to something in the range of $1700 a year - $2400 less in spending. This is the same as a before tax pay increase of $500 a month.

The amounts the government is proposing is still small, but they have started the process of taxing a bad to change behaviour.